Stock Brokers
Stock brokers are professionals who buy, sell, and trade shares for investors or corporations. The main role of stock brokers is to complete any transactions required by the investor. The tasks of stock brokers go well beyond this main role, however. For instance, stock brokers are also required to perform market analysis and deal with clients. In some cases, stock brokers act as a principal, which means they trade shares on their own behalf.
Three Types of Stock Brokers
There are three kinds of stock brokers. The type of stock broker depends on the amount of control delegated to them by their clients.
Discretionary dealing gives full control to the stock broker. This is when clients provide the budget and objectives to the broker, and the broker makes all of the decisions on his own discretion.
Second, advisory dealing is when the stock brokers play an advisory role in the trades. Stock brokers advise the client on market trends, price movements, and company information. Then, the client makes the final decision on what to invest in.
The third type of broker is called the execution-only broker. These stock brokers buy, sell, and trade shares depending only on the decisions of the client. Although stock brokers in the execution-only category still give advise, they play less of a role in deciding which transactions to complete.
Other Information on Stock Brokers
Stock brokers have to be licensed in order to enter into the profession. There are different kinds of licenses that allow stock brokers to perform different tasks. Licensure exams are given to people who want to become stock brokers. The results of these exams will determine which kinds of stocks you can handle as a stock broker. Licensed stock brokers may offer different types of professional services to clients.
